The situation caused by Covid-19 and the subsequent downturn has turned all our marketing plans and projections upside down. Chances are that the economy will continue to stay sluggish in 2021, albeit better than 2020.
Some experts suggest that we will witness a W-shaped recovery, which means that the economy could plummet before recovering once again.
All this presents us with a lot of uncertainty. As a marketer, how do you plan your budget going into the new year?
Your plan for the short-term
Marketers typically have a two-pronged approach for their campaigns. A part of the budget is for the short-term: campaigns that bring in leads and customers now. Pay-per-click advertising, influencer marketing campaigns and email blasts are all good examples of this.
The rest of the budget is for the medium-to-long term: SEO, social media marketing, video marketing, and branding exercises are great examples. These campaigns don’t yield revenue right away but are very profitable in the long-term. Balancing short-term ROI and long-term branding tactics is something we also highlighted in our social media trends for 2021.
The split between the two campaigns is based on the marketing cycle. A higher spend on short-term campaigns works when your marketing cycle is short—this is because of the shorter turnaround in recovering your investments.
But if your cycles are long, then it doesn’t make a lot of sense to invest in campaigns that aren’t sustainable. Increasing your spending on sustainable strategies like SEO or branding is a better idea.
Here’s the thing: the current downturn has presented us with both a challenge and an opportunity.
Your customers have less money to spend today than earlier. This could increase your CAC (Customer Acquisition Cost).
On the bright side, though, CPM/CPC rates are lower today, and this means a potentially greater ROI for your paid acquisition. Not surprising, then, that in many industries, businesses are actually spending.
In the end, the direction you take depends entirely on your industry and core objectives.
Industries like ecommerce, online business tools, and telecoms have seen a spurt in growth and activity since the pandemic started. These industries will continue to see growth next year.
However, industries like commercial real estate and wealth management are seeing a dip in activity and may thus need a different strategy.
If consumers in your industry are still buying, plan for a higher short-term spend, and if that’s not the case, then a long-term strategy may make better sense.
Go for the tried and tested
When the world went into a recession back in 2008, I was working at a startup that made text messaging free, with ads.
Text messaging was huge back then, and marketers were understandably pumped about the prospect of reaching their customers from inside SMS that were shared between friends or family members.
That was until the economy went into a tailspin. The gloomy economic prospects meant advertisers quickly stopped spending money on experimental campaigns. I lost my job soon after.
We are now witnessing a rerun of the same. As a marketer, you may have already stopped spending money on campaigns that you are not totally convinced about. Given the anticipated W-shaped recovery, it is perhaps still not a good time to spend your budget on marketing channels that are new or have not been tested enough.
If you have not prepared a marketing resources inventory checklist, start with that. Once done, look into your analytics for channels that delivered the highest ROI—and only invest in them if you already have the resources to get it done, and the numbers to prove its effectiveness.
Cut down on costs—and free up bandwidth
Business had been sluggish all through last year, and so you simply may not have the bandwidth to up your spending. Except for a select few industries, most marketers are going to feel the pinch when it comes to budgeting for 2021.
A number of businesses have already cut their workforce down to free up bandwidth. If your strategy for 2021 involves very little ad spend, then you may want to consider trimming your advertising team and potentially switching to an agency or contracting model.
This is, of course, a very controversial statement to make and a hard pill for any founder to swallow. So, it is not something you may be willing to consider unless things are really bad.
A more palatable option is to cut down on your operational expenses. The marketing team doesn’t have as much control over administrational resources, however you may consider cutting down on marketing tools and spends.
For instance, you could consider downgrading or switching to alternatives for Hootsuite, Hubspot, MailChimp, or other marketing tools you currently use. The savings could amount to only a few hundred pounds, but this quickly adds up.
The idea here is that every pound saved is a pound added to your marketing budget—and this gives you more bandwidth to plan for the upcoming quarter or year.
Finally, have a plan B in place
If 2020 has taught us anything, it’s the futility of making plans and projections. While 2021 appears more promising, there is still no way of knowing if things will stay the same or will get better; and if so, how much better?
Have a good plan B in place. And for that matter, a plan C, as well! Alternatively, keep at least a part of your budget fluid so that you can shuffle it across channels in case reality plays out differently than anticipated. This way, you are in a position to act decisively in case you see an opportunity and want to grab it before the competition gets there.
Over to you—what’s your 2021 looking like? What channels are you spending more on, and what do you plan to cut down on? Share it with us on our social channels.